This summer saw more than one million tonnes of potash pass through the Port of Thunder Bay, the most in 30 years. If the months-long Russian invasion of Ukraine continues, analysts expect the demand for Canadian potash to remain high for some time.
During the same period in 2021, about 413,000 tonnes of potash had gone through the port. The big difference has been the disruptions to the global supply chain, caused by the invasion and subsequent sanctions placed on Russian companies.
“Canada, Russia and Belarus are the top three producers of potash in the world,” said Chris Heikkinen, director of business development and communications with the Port of Thunder Bay.
“Countries are not rushing to buy Russian and Belarussian potash right now, because there are sanctions on that product. So instead, the demand for Canadian potash has skyrocketed.
“You’re seeing demand for Canadian potash increase all over the world, and the Port of Thunder Bay is basically serving as a relief valve for getting that commodity to market, mostly in Europe and somewhat in South America as well.”
Canadian potash feeding global market
Potash is used in the agriculture industry as fertilizer. Saskatchewan is home to the largest-known potash deposit in the world.
Thunder Bay is the only port on the St. Lawrence Seaway that can export potash, Heikkinen said. The port has two dry bulk facilities in the city that are equipped to handle the product.
While there are ports in Western Canada that can export potash as well, Thunder Bay isn’t seeing the congestion experienced by those ports.
“We’ve got this available capacity, and these are the times when you see it, see the value of our port,” Heikkinen said.
The Canadian potash and fertilizer market has boomed this year amid the supply-chain issue brought on by the Russia-Ukraine war.
In May, Saskatoon-based Nutrien Ltd., the world’s largest producer of fertilizer, reported earnings of $1.4B US for the first quarter 2022.
But it’s unclear exactly how long that will last. A recent Scotiabank report suggested potash prices are dropping globally as the last several months of falling prices haven’t been enough to stimulate demand. At the same time, potash availability continues to improve.
Finance Minister Chrystia Freeland recognized Canada’s potash industry during a tour of Saskatchewan, saying it’s a key driver of the global market.
“Farmers around the world depend on our potash, on the potash you see right there, millions and millions of people depend on the work that is being done here, right now, to eat,” she said to reporters during a tour of a potash facility in Colonsay, Sask.
The government has also announced plans to increase exports of strategic commodities, including potash, to Europe, and announced in the summer it was providing up to $100 million to reduce emissions at a future potash mine in Saskatchewan.
The mine, being developed by BHP, is expected to be operational in 2027, and it’s expected to be the largest potash producing mine in the world.
While potash has driven a record surge in shipments through Thunder Bay, it’s also played a key role in Saskatchewan’s provincial budget. The demand is a key reason the province now expects to finish this fiscal year with a $1-billion budget surplus.
With the banner summer behind him, Heikkinen said he’s unsure whether the Port of Thunder Bay will see the same record-breaking shipments next year, but does expect the higher-than-normal level to continue for a while as the market levels out.
“Given the context that we’re in, you’re probably going to continue to see higher demand for Canadian potash for quite some time,” he said.
“I would hazard a guess that you might not see quite this high of a volume of potash going through Thunder Bay next year, as bottlenecks at some of the other ports start to alleviate. But I’d say it’s certainly likely that you’ll see elevated levels here over what has been considered normal for quite some time.”